5 “Gossips” about Credit Cards You Should Not Trust
As human beings, we love to read about the latest gossips, watch sports, go shopping, and various other things. However, we usually do not spend a lot of time learning about the thing that is counted amongst our favorites- Money.
Money can anyway be a funny subject.
It is easy to learn how to use your money for satisfying your momentary wants and desires but comparatively difficult to learn how to save it for your better future.
While discussing money, one cannot skip credit cards. Living in the UAE, learning some important credit card tips can help you in improving your financial life.
Lack of knowledge of your credit card in UAE may lead you into making money mistakes that could prove to be harmful for your financial situation.
Some users may rack up huge amounts of debts on their credit cards as they are unaware of the mistakes they could be making. They make these mistakes as they trust various myths about credit cards and what could be worse, they even believe that these myths have been helping them.
Although you can be a person who has mistakenly fallen for any such myth in the past but changing for better is always an option.
Here is a list of the most common myths on a credit card.
Always Carrying a Balance on the Credit Card
A lot of people in the Emirates believe that a simple way of improving your credit score can be carrying a balance on your credit card and paying interest on it.
The interest rate charged on even the best credit card in UAE is usually high. Hence, this terrible financial advice.
If you ever hear someone saying things like-
“Carry at least a five percent balance on your card. Do not pay off your entire debt as the provider will cancel your credit card automatically and delete the account history.”
There are various methods for improving the credit rating; however, making interest payments every month all your life is definitely not amongst them.
If you wish to make your credit score better through your credit card, it is advised that you pay off your entire balance monthly before any interest is charged.
You can follow these general tips for improving the credit score.
- Ensure that you pay your bills timely. Late payments could harm your credit score.
- Check your credit report regularly.
- Try to keep your balance as low as possible.
- Request your provider to raise your credit limits, but make sure you do not spend up to this revised limit.
- Make payment before the card balance gets reported.
Credit Card is Free Money
Your credit card in UAE is not your free money. But, many of you treat your cards as if they are. In case you use a credit card, you must always ensure that you have funds in the form of cash or in a personal account before thinking that you are able to afford something.
Your dresses, shoes, gadgets, etc. are not worth any debt, which may get accrued in case you are using a credit card for purchasing them without being capable of affording it.
This is amongst the worst myths as believing this may cost you for a long time. In case you are confused about whether you are capable of affording something or not, following are the things that can be done.
- Make a purchase decision after analyzing all the odds.
- Consider the other things you can utilize this money for.
- Consider the time you will have to spend working on paying for this purchase.
- Check if you have regretted any similar purchase in the past.
Make the purchases only if you think you can really afford them.
Making only the Minimum Payment Every Month is Enough
This is amongst the most common myths on a credit card in UAE. Some people make only the minimum payment as they do not have enough money to make payment of their entire balance every month.
While some pay the minimum amount only as they think that is all they need to pay so as to avoid paying interest.
You need to understand clearly what the term minimum payment refers to and what are the consequences when you only make the minimum payment.
Let us first breakdown what a minimum payment is.
A minimum payment is typically the smallest payment your credit card provider will let you make monthly. It, however, leads to making more payments in the long-run due to the interest charged. Although a minimum payment has the capability of keeping you in a fair standing; however, it may have a negative impact on your credit score.
It may be a shock for you, but making only the minimum payments isn’t enough!
You must try to pay above this minimum amount. On failing to do so, you will be charged an interest that can raise the debt on your credit card by a considerable amount every month.
You will Always have to Make Interest Payment on Using a Credit Card
Weirdly, there are many people out there who are not aware of how exactly a credit card in UAE works. They think that they need to make interest payments every time they use their credit card, also when they pay their entire bill every month.
But it’s time for them to open their eyes.
You can use your credit card almost for everything and save yourself from paying even a single penny towards late charges, interest or any other such fees.
You must be wondering how?
Simply by making payment of the entire balance before it gets due.
This is not really amongst the myths that can negatively impact your financial situation; however, having a knowledge of how exactly a credit card works can prove to be helpful for you in the future.
Only Those having Financial Problems Opt for a Credit Card
People generally consider the credit cardholders to be idiots who must be under thousands of dirhams under the credit card debt. They advise these cardholders to get rid of their credit cards instantly so as to save their lives from getting ruined.
These are the people who believe a lot of these myths. They consider there isn’t a responsible way of using a credit card.
We understand that there are people who personally prefer using cash, but this does not challenge the fact that there are responsible ways of using a credit card and that too at your advantage.
Suffice to Say!
There are many people who even after holding the best credit card in UAE, believe in the above-mentioned credit card myths.
The most upsetting part is these myths may lead to credit card debt, which in turn leads a lot of people to live with a debt cycle. As a consequence, they end up suffering depression, frustration, stress, and more.
If you have been a prey to any of these myths, then this is the time to get over them and see the credit cards for what they really are.